PERTH (miningweekly.com) – Gold junior Gascoyne Resources has unveiled a A$50-million funding package to advance exploration work and deliver an updated operating plan for its Dalgaranga gold project, in Western Australia.

The funding package will comprise a A$26.3-million equity raise, a A$21.3-million investment from Tembo Capital and a A$2.5-million unsecured loan from Delphi.

Under the equity raising, Gascoyne would undertake an underwritten institutional placement of 86-million new shares, at a price of 10c each, to raise an initial A$8.6-million, and a 1-for-2.42 pro-rata accelerated non-renounceable entitlement offer of 176-million new shares, to raise a further A$17.6-million.

The placement price represents a 49% discount to Gascoyne’s last closing price, and a 37% discount to the company’s theoretical ex-rights price.

The placement will fall within Gascoyne’s existing capacity and will not require shareholder approval.

Additionally, Gascoyne has also entered into binding agreements with Tembo Capital Mining for a A$21.3-million investment, which will be split across two tranches including a A$15-million secured loan to mandatorily convert into fully paid ordinary shares in Gascoyne at 10c a share, and a A$6.3-million secured loan to mandatorily convert to a 1.8% gold royalty over all Dalgaranga tenements and a 1.35% royalty over the Yalgoo, Glenburg and Mt Egerton tenements.

Following conversion of tranche A, Tembo Capital will have the right to nominate one person to be appointed as a non-executive director to the Gascoyne board of directors in addition to information and access rights and rights to participate in future equity offers, provided that Tembo Capital has at least a 9.0% shareholding in Gascoyne.

It is expected that experienced geologist, corporate executive and company director, John Hodder, will join the Gascoyne board of directors as Tembo Capital’s nominee following conversion of tranche A.

Meanwhile, in addition to its commitment of up to A$5.8-million in the equity raising, shareholder Delphi has entered into a binding agreement with Gascoyne to provide a A$2.5-million unsecured loan to mandatorily convert to a 0.7% gold royalty over all 100% owned Dalgaranga tenements and 0.525% gold royalty over all 100% owned Yalgoo, Glenburgh and Mt Egerton tenements.

Gascoyne said on Monday that A$39.2-million of the funds raised would be used on exploration work at Never Never, studies at Yalgoo and care-and-maintenance costs for the Dalgaranga operation, through to the end of June 2024.

The company in November last year suspended operations at Dalgaranga, transitioning the 2.5-million-tonne-a-year mill to care and maintenance.